Full & Final Offers

sjx1407

Hi all,

Firstly, many thanks for taking the time out to read and help!

I've posted din the Bankruptcy forum as I've been advised that Bankruptcy is the best way forward for me. However, I would rather tackle my debts in a different way.

I currently pay £500 per month interest on the following:

Barclaycard: £7000
Barclays Overdraft:£6000
MBNA: £6500

Im in a position where I can make min payments by struggling, but in no position to clear the debts.

Rather than Bankruptcy, I would prefer to move to token payments, put the £500 per month aside and in 6 months go for F&F offers. I don't want to simply walk away from my debts.

I realise that it may take 18 months and discipline to raise the £9000 required to settle all 3 accounts (based on 50% F&F), but I'd be more than happy with that.

At this moment I haven't missed any payments to anyone in 3 years. I guess what I'm asking is what do I need to do to do the above?

How do I go about making token payments? Do I forewarn the creditors of my circumstances and token payments? Is this even a good thing to do.

I'm completely lost and would genuinely appreciate any advice! I don't want to write off any more life as a slave to debt!

Many thanks once again!

sourcrates

Hi and welcome.

Your first step is to do an SOA (statement of affairs).

Without this it's impossible to give anything more than just general advice.

Link here :

http://www.stoozing.com/calculator/soa.php

sjx1407

The ks for your reply. Please see below.

Any questions and don't hesitate to ask.


Income, Expense, Debt & Asset Details
Income Amount(£)
Monthly income after tax 1600
Partners monthly income 0
Benefits 0
Other income 0
Total monthly income 1600

Expenses Amount(£)
Mortgage 0
Secured/HP loan payments 0
Rent 450
Management charge (leasehold property) 0
Council tax 91
Electricity 25
Gas 25
Oil 0
Water Rates 35
Telephone (land line) 20
Mobile phone 25
TV Licence 12
Satellite/Cable TV 0
Internet services 0
Groceries etc. 100
Clothing 50
Petrol/diesel 100
Road tax 27
Car Insurance 29
Car maintenance (including MOT) 15
Car Parking 0
Other travel 0
Childcare/nursery 0
Other child related expenses 125
Medical (prescriptions, dentists, opticians etc.) 0
Pet Insurance/Vet bills 0
Buildings Insurance 0
Contents Insurance 0
Life Assurance 0
Other Insurance 0
Presents (birthday, christmas etc.) 0
Haircuts 10
Entertainment 0
Holiday 0
Emergency Fund 0
Total monthly expenses 1139

Secured & HP Debt Description Debt(£) Monthly(£) APR(%)
Mortgage 0 (0) 0
Secured & HP Debt totals 0
- -
Unsecured Debt Description Debt(£) Monthly(£) APR(%)
Overdraft 6000 175 0
Barclaycard 7000 150 0
MBNA 6000 135 0
Unsecured Debt totals 19000 460 -

Asset Description Value (£)
Cash 0
House Value (Gross) 0
Shares and bonds 0
Car(s) 0
Other assets (e.g. endowments, jewellery etc) 0
Total Assets 0

sourcrates

sjx1407 wrote: »

Contents Insurance 0
Entertainment 0
Holiday 0
Emergency Fund 0

These four catagories need to be completed.

It's wise to have contents insurance, entertainment, you never go out ? Or take holidays ?.

Emergency fund, If your going to enter any form of debt solution you need a number in here.

sjx1407

The above are what I pay now and have done for 3 years. This facilitates making the payments on the debts.

I agree none of them are wise long term which is why I'm seeking advice.

And I guess what I'm saying is that I'm happy to continue with the above with an end in sight.

If in 18 months I have freed up £500 per month, then I could live fine on my income.

My preference is not to go bankrupt if the effects would be more detrimental on any future credit.

Ultimately, I'd one day like to have a mortgage and just want to make sure I make the right decision now whilst my payments are all green.

I've paid circa £18000 in interest on these accounts over the last 3 years, so wouldn't feel too bad about F&Fs, but they are my debts and I do feel obligated to repay what I can - if only from a decency perspective.

Hope this makes sense!

sjx1407

To answer your questions directly though. I don't 'go out' in the traditional sense. I see close friends regularly and have a coffee, etc. I haven't been on holiday for 3 years and have shared custody of our son, so we do have fun, but cheap fun. In many respects, this was an unexpected positive - board games, walks, games, etc have probably brought us closer. The time we have together is quality time.

But yes, I'd like to take him places when he's older. See the world, etc.

I don't have contents insurance which is a bit of a risk, but I can accept that.

Not really sure what else to write. I'll answer anything as honestly as I can though.

sourcrates

sjx1407 wrote: »

To answer your questions directly though. I don't 'go out' in the traditional sense. I see close friends regularly and have a coffee, etc. I haven't been on holiday for 3 years and have shared custody of our son, so we do have fun, but cheap fun. In many respects, this was an unexpected positive - board games, walks, games, etc have probably brought us closer. The time we have together is quality time.

But yes, I'd like to take him places when he's older. See the world, etc.

I don't have contents insurance which is a bit of a risk, but I can accept that.

Not really sure what else to write. I'll answer anything as honestly as I can though.

The point I'm trying to get over to you is that if you go down the Bankrupcy route, you will have to produce a comprehensive budget, and that means putting figures in every box that's applicable to you.

The higher your monthly budget, the less any income payment arrangement will be, do you see where I'm coming from.

At the moment you have no income to save for full and finals.

sjx1407

Hi again Sourcrates,

Thanks for your persistence in this - hopefully I'm not coming across too obtuse!

I realise a SOA pre-bankruptcy would need to show a zero surplus, but what I am trying to do is avoid the bankruptcy route.

My thought (in all its potential naivety) is to continue living to the above SOA, but make nominal payments to each creditor. Meanwhile, the payments to creditors outlined in the above SOA would build up at £500 per month.

In 6 months I would propose F&F to each creditor based on the £3000 that would have built up.

If refused, I would propose again at 12 months and so on until an agreement is reached.

Bankruptcy is something I would rather not do, but equally I appreciate I cannot continue treading water - and nor will the banks listen so long as my payments are going in on time.

Am I being at all sensible?

sourcrates

Well yes it's one approach to take.

It will work best for you once all debts are defaulted, and sold on, until then, don't expect much discount.

It's usually when debts get sold on, that the new owner, who buys them in bulk for pennies in the pound, will be able to offer the most discount for a quick settlement.

Can take a while to get to this stage though, a year, two maybe.

Don't expect them to do you any favours with regard to your credit file either.

If that's of no consequence to you, then you have the makings of a plan yes.

sjx1407

Thanks again - then I think I have the makings of a plan.

The reality is I have 3 options.

1. Carry on as is and have nothing to aim for or plan for. Indefinitely.

2. File for Bankruptcy and guarantee a shattered credit rating for up to 10 years.

3. Do as proposed above. Accept that my credit rating will be damaged, but play hardball and negotiate a 'fully settled' status as opposed to a 'partially settled' status if and when an agreement is reached.

Unless I'm missing something, there's only one option that gives me any hope of a future. It also enables me to utilise other existing credit (I have existing cards with zero balances) and pay off each month.

Despite the debt (just a really bad period in life), I'm not tempted by credit and am disciplined enough not to use other cards for anything other than paying the balance each month.

I'm not sure if anyone has done such a thing before, but if they have I'd appreciate your input! I won't be doing anything until March as I want to make sure I do it right.

Just one more question if you would!?

Should I notify creditors - both of my circumstances and my intention to pay £5 per month? Or do I default and wait?

I know I must do everything in writing, but am nervous about the whole process. Would a full letter complete with SOA sent to each creditor count for anything? Especially if (worst case scenario) I am taken to court?

Thanks again for all your time!

sourcrates

Normally, original creditors won't take court action, they simply pass the accounts to debt collectors to manage for them.

In this senario the debt collector has no power whatsoever, as they are only acting for the client, they do not own the debt, so are no more than an advisory service basically.

They can be ignored.

They may pass your accounts to various collectors, but again, they will all have the same status.

It's only when a debt is sold, that you need to pay attention, if this happens, you will be told in writing, so it's then up to you to negoatiate a deal you are both content with.

Just one further point to clarify, if you settle a debt for less than the outstanding balance, it will be marked as a partial settlement on your credit file.

The only way to obtain a full settlement status is to pay the account in full.

Hope that clears that up, the title "full and final settlement" can be confusing at times.